New Car Sales and Used Car Stocks: A Model of the Automobile Market

This article develops a short-run general equilibrium model of the automobile market by combining a discrete choice model of consumer automobile demand with simple models of new automobile production and used vehicle scrappage. The theoretical model allows an unlimited degree of heterogeneity of bot...

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Bibliographic Details
Published inThe Rand journal of economics Vol. 16; no. 2; pp. 195 - 214
Main Author Berkovec, James
Format Journal Article
LanguageEnglish
Published Mount Morris, Ill The Rand Corporation 01.07.1985
The RAND Corporation
Rand Corp
Rand Corporation
SeriesRAND Journal of Economics
Subjects
Automobile sales
Automobiles
Consumer behavior
Consumer prices
Econometrics
Economic activity
Economic models
Estimates
Forecasting models
Foreign cars
Fuel efficiency
Import prices
Markets
Modeling
Production
Scrap
Simulations
Supply & demand
Vehicles
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Summary:This article develops a short-run general equilibrium model of the automobile market by combining a discrete choice model of consumer automobile demand with simple models of new automobile production and used vehicle scrappage. The theoretical model allows an unlimited degree of heterogeneity of both consumers and automobiles, with equilibrium defined as aggregate demand equal to supply for every vehicle type. Econometric estimates of the scrappage and demand functions are then used to create a simulation model of the automobile market, which is used to provide forecasts of automobile sales, stocks, and scrappage for the 1978-1990 period.
ISSN:0741-6261
1756-2171
DOI:10.2307/2555410